Israeli stent-maker Medinol has handed out up to $400 million worth of dividends in the last five years, has learned. Its partner Boston Scientific (NYSE:BSX) (BSX) - Get Report received about $80 million of that amount.

The stents made by Jerusalem-based Medinol, a privately-held company established by Kobi and Judith Richter together with scientists Gregory Pinchasik and Benad Goldwasser, are marketed exclusively through Boston Scientific.

The Richters today own 65% of Medinol's shares, after buying out the 9% held by Israeli venture capital fund Polaris (today renamed Pitango) in December 1999 according to a company value of about $400 million. Boston Scientific holds another 22%, and Pinchasik owns 13% of Medinol's shares.

Medinol's stents, essentially wire-mesh tubes used to prop open large veins after cardiac surgery, are based on a development by Pinchasik, who emigrated from Russia to Israel about ten years ago.

Medinol achieved peak revenues of roughly $220 million in 1999. The company's earnings margin on its revenues is about 80% to 90%.

Medinol is entitled to royalties on Boston's sales of the Medinol stents, under an exclusive marketing agreement. The royalties were originally set at 30% of the product's final selling price.

The agreement was amended two years ago, lowering Medinol's take to 23% of the total value of the stent and its installation assembly.

During the last five years Boston's share of the world stent market, which is estimated at $2.5 billion a year, ranged from roughly 15% to 35%. In 1999 its market share maxed at about 35%. Boston's income from selling Medinol stents came to $800 million, which brought Medinol some $200 million.

That year Medinol received another $16.5 million from Boston, after an audit at Medinol found that the American company owed it more than paid. Medinol's net profit in 1999 came to 90% of its revenues, or about $200 million.

Medinol's plant in Har Hahotzvim, Jerusalem, is defined as an "approved enterprise". That status grants it an exemption from tax as long as it does not distribute profits. As Medinol has in fact distributed as dividends most of the profits it accrued until about a year ago, as has learned, the beneficiaries were liable to tax, which was paid.

Boston's share came to about $80 million. Altogether Boston invested $40 million in Medinol, not including the price of buying out another Medinol co-founder, Prof. Benad Goldwasser.

Medinol and Boston have been embroiled in a touchy legal battle for years. In June, Boston opened offices in Israel and filed a suit against the Richters in Jerusalem, reported.

The move followed a series of suits and countersuits in American courts as the parties struggled over their relations and a possible price for Medinol, which Boston sought to acquire in full.